DISCLAIMER:
Please consider information in this Risk Disclaimer (“Statement”) as a general overview of investments risks made for your awareness only. We do not intend to provide investment or legal advice through this Statement and make no representation that the investments or services described herein are suitable for you or that information contained herein is reliable, accurate or complete.
We do not guarantee or make any representations or assume any liability regarding financial results based on the use of the information in this Statement, and further do not advise to rely on such information in the process of making a fully informed investment decision.
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The risks outlined in this statement are not exhaustive and only describe the general nature of the risks involved with trading Virtual Assets. The intention of this statement is just to outline the risks, and not to discuss in detail all the risks associated with holding or trading Virtual Assets. Clients should undertake their own assessment as to the suitability of trading in Virtual Assets or Stablecoins based on their own investigations, research and based on their experience, financial resources and objectives. At the further outset, Investment in securities involves certain considerations and a high degree of risk. You should not deal in designated investments unless you understand their nature and the extent of your exposure to risk. Not all investments are suitable or appropriate for all investors. You should make sure that your chosen investment is appropriate and suitable for you. Before committing to any specific type of designated investment, you should understand the nature and risks associated with that type of investment. In case a designated investment is composed of two or more different designated investments or services, the associated risks are likely to be greater than the risks associated with any of the components. Whilst we cannot disclose all possible risks or significant aspects regarding individual designated investments, you should note the following risks.
To this Statement “you”, and “your” mean the Client and “we”, “us”, “our” mean D24.
Clients are strongly advised to read this Risk Disclaimer carefully before deciding to start availing themselves of the solutions on the platform.
Global offering of Client’s Product or Services
Although the Site is accessible worldwide except for restrictions, not all products or solutions/ services discussed or referenced in or on the Site are available to all persons or in all geographic locations or jurisdictions. D24 Financial Group reserves the right to limit the availability of the Site and/or the provision of any product or service to any person, geographic area or jurisdiction it so desires, in its sole discretion, and to limit the quantities of any such product or service that it provides. Any offer for any product or service made on the Site is void where prohibited.
This site is controlled and operated by D24 Financial Group from its offices within the emirates of Dubai, UAE. Those who choose to access this Site from other locations do so on their own initiative and are responsible for compliance with laws governing the export of products and services and other applicable laws, including local laws, if and to the extent local laws are applicable. If you purchase items for the purpose of providing services to different jurisdictions, you must obtain appropriate requisite documentation, regulatory approval, licenses and whatever might be necessary to offer that product or service to the specific jurisdiction, and that responsibility is solely yours.
OVERVIEW OF GENERAL RISKS ASSOCIATED WITH VIRTUAL ASSETS
The Risk Disclaimer addresses the risks that are associated with trading and
transacting in Virtual Assets below:
(i) Assets are not Legal Tender; (ii) Loss of Value, Volatility and Uncertainty of Future performance; (iii) Market Forces; (iv) Financial Crime and Cyber Attacks; (v) Availability of Virtual Assets; (vi)Technology Risk; (vii) Regulatory Risk.
DISCLOSURES
A. RISKS RELATED TO THE SERVICES, VIRTUAL ASSETS, AND ACCEPTED VIRTUAL ASSETS AND STABLECOINS
RISK OF LOSS IN TRADING VIRTUAL ASSETS CAN BE SUBSTANTIAL AND YOU SHOULD, THEREFORE, CAREFULLY CONSIDER WHETHER SUCH TRADING IS APPROPRIATE FOR YOU IN LIGHT OF YOUR CIRCUMSTANCES AND FINANCIAL RESOURCES. YOU SHOULD BE AWARE OF THE FOLLOWING:
(i) Virtual Assets are Not Legal Tender: Most Virtual Assets are not backed by any central government or legal tender, meaning each country has different standards. There is no assurance that a person who accepts a Virtual Asset as payment today will continue to do so in the future. Holders of virtual assets put their trust in a digital, decentralized and partially anonymous system that relies on peer-to-peer networking and cryptography to maintain its integrity, and neither vendors nor individuals have an obligation to accept Virtual assets as payment in the future;
(ii) Loss of Value, Volatility and Uncertainty of Future Performance: There is limited or no fundamental reasoning behind the pricing of Virtual Assets, creating the risk of volatility and unpredictability in the price of Virtual Assets relative to Fiat Currencies. Virtual Assets have had historically higher price volatility than Fiat Currencies with no or limited tangible underlying for price reference, allowing irrational and exorbitant moves in price as the process for valuation is speculative and uncertain.
(iii) Market Forces Trading in Virtual Assets may be susceptible to irrational market forces, such as speculative bubbles, manipulation, scams, and fraud.
(iv) Financial Crime and Cyber Attacks Cyber Crime is more prevalent as the ecosystem is totally digital and devoid of traditional governance, examples such as should be recognized. The nature of Virtual Assets may lead to an increased risk of cyber-attack as the ecosystem is totally digital. For example, a 51% attack is an attack on a blockchain by any Person or group of Persons who control more than 50% of the network's mining hash rate. Attackers with majority control of the network can interrupt the recording of new blocks by preventing other miners from completing blocks, altering payment history and subverting funds. Clients are susceptible to Malware and fake/hijacked addresses and other forms of Cyber-attacks that holding Virtual Assets may pose and Clients should always take care of passwords and double check the addresses and URLs before loading software.
(v) Availability of Virtual Assets D24 makes no guarantee to the availability or time of providing clients with the ability to sell or purchase Virtual Assets on the platform. The availability of assets is outside of D24 control and is dependent and counterparties be willing to sell the desired virtual asset and vice versa. Virtual Assets are required to be approved by the Regulated Authority for trading on the Platform. Such approval may be withdrawn at any time. Any Virtual Asset may be delisted at any time without any notice or consent. Similarly, any new Virtual Asset arising from a hard fork or similar changes to a Virtual Asset's protocols will require approval by the Regulator prior to being traded on the Platform.
(vi) Technology Risk The risks of Virtual Assets being transacted via new technologies, (including distributed ledger technologies (‘DLT’) with regard to, among other things, anonymity, irreversibility of transactions, accidental transactions, transaction recording, and settlement. Transactions in Virtual Assets on the blockchain relies on the proper functioning of complex software, which exacerbates the risk of access to or use of Virtual Assets being impaired or prevented. Failing to acknowledge this can prevent Clients from use/access to Virtual Assets.
(vii) Regulatory Risk Many trading venues and Virtual Asset services are not regulated, or subject to limited regulation, and Clients should choose counterparties after careful due diligence. You further acknowledge the above list of risks is non- exhaustive and there may also be unpredictable risks.
GENERAL RISKS
Systemic risk This risk concerns several financial institutes and materializes in the impairment of such institutes’ ability to execute their functions properly. Due to the high degree of interaction and interdependence among financial institutes, the assessment of systemic risk is complicated, but the realization of such a risk may affect all the participants of the financial market.
Market risk This risk materializes in adverse dynamics in the value of financial instruments. Among the factors influencing the value of financial instruments are the price of equities, debt, and commodities; exchange, interest, and other reference rates; as well as their volatilities and correlations. These factors are influenced by, among other things: political instability, government trade, fiscal and monetary policies, the state of the market and industries, as well as force majeure circumstances caused by natural disasters or war. Subject to the chosen trading strategy, market risk constitutes an increase (decrease) in the value of financial instruments. You should realize that the value of your financial instrument can either increase or decrease and that an increase in the past may not mean an increase in the future. Market risk includes the following components:
Currency risk The assets may be invested in instruments, which are denominated in different currencies. In such cases, you will encounter currency exchange risks. These risks are particularly significant in emerging markets. Currency risk materializes in the possibility of loss that is due to the concertation of one currency to another.
Interest rate risk This is a risk of a decline in the value of debt securities when interest rates rise, or that income from bonds or money market instruments could decline due to falling market interest rates.
Risk of equity issuer bankruptcy This risk materializes in a sharp decrease in the price of equity of an enterprise when it becomes insolvent or when the possibility of it becoming insolvent is significant.
Liquidity risk This risk materializes in a loss of ability to sell (buy) a financial instrument by the necessary price due to a significant decrease in demand (supply) for such an instrument. In particular, liquidity risk may materialize when it is necessary to sell a notable number of financial instruments, as their price may decline sharply. You should understand that financial instruments considered illiquid are likely to show sharp price movements when a significant transaction of these instruments takes place.
Criminal risks Some countries are affected by corruption and organized crime and many businesses can be considered potential victims of theft and distortion. The negative consequences of crime and corruption may adversely affect the value of investments or cause the manager to alter certain activities or liquidate certain investments.
Regulatory and legal risks Transactions on markets in different jurisdictions may expose you to additional risks. The markets are subject to ongoing and substantial regulatory changes. It is rarely possible to predict what statutory, administrative, or exchange changes may occur in the future or what impact such changes may have on your investment results. You should realize that, depending on the jurisdiction, transfers of ownership of securities may be subject to limitations and that foreign investments in many countries are subject to currency, tax, and export restrictions as well as to numerous other regulations. Foreign investment legislation may not provide assurances of the rights of foreign investors to remit profits, dividends from their investments, and repatriation of capital upon the liquidation of such investments.
In emerging markets, there is generally less government supervision and regulation of business and industry practices, stock exchanges, OTC markets, brokers, dealers, and issuers than in more established markets. In certain areas, the law s and regulations governing investments in securities and other assets may not exist or may be subject to inconsistent or double- readable interpretation.
Tax risk Because of the complexity of tax laws and the different considerations that apply to each market participant, you should consider the tax consequences of an investment in a managed account. It is possible that the current interpretation of tax laws or understanding of practice may change, or even that the law in some countries may be changed with retrospective effect.
Suspensions of Trading Under certain trading conditions, it may be difficult or impossible to liquidate a position. This may occur, for example, if the price rises or falls in one trading session to such an extent that, under the rules of the relevant exchange, trading is suspended or restricted. Placing a stop loss order will not necessarily limit your losses to the intended amounts, because market conditions may make it impossible to execute such an order at the stipulated price.
Clearing house protection On many exchanges, the execution of transactions is guaranteed by the exchange or clearing house. However, this guarantee is unlikely to cover you in most circumstances and may not protect you if a counterparty defaults on its obligations to you. Please acquaint yourself with any protection provided to you under the clearing guarantee applicable to any on- exchange instruments with which you are dealing. There is no clearing house neither for traditional options nor for off- exchange instruments which are not traded under the rules of a recognized or designated investment exchange.
Use of the internet and online account Internet is not a secure network and and any communications/material/documents/information transmitted over the Internet or through access to an Online account may be intercepted or accessed by unauthorized or unintended parties, may not arrive at the intended destination, or may not arrive in the form transmitted. There can be no assurance that any communications/materials/documents/information transmitted over the Internet or through access to an Online account shall remain confidential or intact. Any communications/materials/documents/information transmitted to or from You through the Online account shall be at Your sole risk. It is Your responsibility to ensure that no person shall have access to Your Online account other than You or Your duly authorized representatives.
INSTRUMENT-SPECIFIC RISKS
Equities Having sufficient financial resources is a key factor in deciding whether investments, such as shares or stocks, are suitable for you. Therefore, you should not invest any amount that you cannot afford to lose. Equity securities are subject to a volatility risk that depends on a variety of factors, including the company’s financial health, the general economic situation, and interest rate levels. Equity instruments do not pay interest, instead, they typically pay out a share of profit, for example in the form of a dividend set by the company, usually in line with its business performance. Sometimes, however, no dividend is paid. Information on past performance is not necessarily a guide to future performance. You may get back less than the amount you originally invested. You have a greater risk of losing money if you buy shares in smaller companies. The purchase and selling prices for such shares are significantly different, and the prices may quickly go up as well as go down. If you decide to sell such shares immediately, you may get back less than what you paid for them. Equity securities are also subject to an issuer risk in that a total loss is possible if the issuer goes bankrupt, in which case holders of equity securities are only taken into consideration once the issuer has settled all other claims against it.
Foreign exchanges foreign exchange (also known as FOREX) is the term used for the purchase of another currency. Foreign exchange transactions expose you to a high degree of risk. Before deciding to trade foreign exchange, you should carefully consider your investment objectives and expectations, level of experience, and amount of risk acceptance. Any market movement will have a proportionate effect on your deposited funds when trading on a marginal basis. This can work for you as well as against you. You may even suffer a total loss more than initial margin funds; or be called upon at short notice to deposit additional margin funds. You should consider risk- reducing strategies such as ‘stop- loss’ or ‘stop- limit’ orders, although these may not necessarily limit losses to the intended amounts.
Where there is a need to convert currency under a foreign currency-denominated contract, the resulting profit or loss will be affected by fluctuations in currency rates. Transactions involving currencies are also likely to be affected by factors beyond our control, such as changes in a country’s political condition, economic climate, and acts of nature. These factors may substantially affect the price or availability of a given currency.
Futures and forwards
Futures and forwards can involve special risks. Only investors who are familiar with these financial instruments, have sufficient money available, and are able to bear potential losses should invest in them.
1. Forwards. With forward sales, the underlying asset must be delivered at the price originally agreed even if its market value has since risen above the agreed price. The loss risk is thus equal to the difference between the two prices. Since there is theoretically no limit to how far the market value of the underlying asset can rise, the potential loss is also unlimited. The forward sale of an underlying asset the seller does not own at the time the contract is signed is known as a short sale. It entails a risk in that the seller may have to buy the underlying at a price higher than the agreed price in order to meet the delivery obligation on expiry. Conversely, with forward purchases, the buyer must take delivery of the underlying asset at the price originally agreed even if its market value has since fallen below the agreed price. The loss risk is therefore equal to the difference between the two prices. The maximum loss, therefore, corresponds to the originally agreed price.
2. Futures. Unlike forwards, futures are considered to be contingent liabilities. This means that if the market moves against your position or margin levels are increased, you may be called upon to pay substantial additional funds on short notice to maintain your position. If you fail to comply with a request for additional funds within the time prescribed, your position may be liquidated at a loss and you will be liable for any resulting deficit. Moreover, it is typical for transactions in futures that the amount of initial margin is small relative to the value of the futures contract so that transactions are ‘leveraged 'or ‘geared’. A relatively small market movement will have a proportionally larger impact on the funds that have been deposited or will have to deposit. You should realize that you may sustain a total loss of initial margin funds and any additional funds deposited to maintain your position. In order to limit price fluctuations, an exchange may set price limits for certain contracts. You should become acquainted with such limits before investing in futures, as it can be much more difficult or even impossible to close a contract if a price limit is reached.
Options All the options fall into two segregated categories: call and put options. A call option gives a purchaser the option to buy, and a put option gives a seller the option to sell, a specific underlying asset at an agreed exercise price and within a specified period of time or on a specific date. The underlying asset can be a share of a specific entity, bond, note, bill, certificate of deposit, commodity, foreign currency, cash value of a share in a stock index, or any other asset provided in the terms of the option.
3. Risks associated with purchasing options. The purchaser of an option risks losing the entire investment in a relatively short period of time. If the price of the underlying asset does not rise above (in case of a call option) or fall below (in case of a put option) the exercise price of the option plus premium and transaction costs during the life of the option, or by the specified date for exercise, as the case may be, the option may be of little or no value and if allow ed to expire will be worthless. The value of an option can drops even when the market value of the underlying asset remains unchanged. This is the case, for instance, when the time value of the option falls, when supply and demand factors are unfavorable or when changes in volatility have a greater effect than changes in market value.
4. Risks associated with selling options: In respect of a call option, the seller who does not own the underlying asset will be prone to a risk of loss should the price of the underlying asset increase. Such a seller may also suffer a loss if the call option is exercised, and the seller is required to purchase the underlying asset at a market price above the exercise price in order to make delivery. In respect of a put option, the seller who does not have a corresponding short position in the underlying asset will suffer a loss if the price of the underlying decreases below the exercise price, plus transaction costs minus the premium received. Under such circumstances, the seller of the put option will be still observing the underlying asset at a price above the market price, with the result that any immediate sale will give rise to a loss. Transactions involving certain options may be carried out in a foreign currency. Accordingly, both purchasers and sellers of these options will be exposed to currency risk, in addition to risks from fluctuations in the price of the underlying asset.
There can be no assurance that a liquid market will exist for a particular option to permit an offsetting transaction. For example, there may be insufficient trading interest in the option; or trading halts, suspensions or other restrictions may be imposed on the option or the underlying asset; or some event may interrupt normal market operations; or a recognized market could decide to discontinue of restrict trading in the option due to regulatory or other reasons. In such circumstances, the purchaser of the option would only have the alternative of exercising his option to realize any profit, and the seller would be unable to terminate his obligation until the option is expired or until he performs his obligation upon being assigned an exercise notice. In some circumstances, there may be a shortage of underlying asset that are due for delivery upon exercise of actual delivery options. This could increase the cost of or make impossible the acquisition of the underlying asset and cause the clearing house to impose special exercise settlement procedure. Buying options involves less risk than selling options. This is because the maximum loss is limited to the premium, plus any commission or other transaction charges in this case. However, if you buy a call option on a futures contract and later exercise the option, you will acquire the future. This will expose you to the risks described in the corresponding section of this Statement.
Selling options involve considerably more risks than buying. You may be liable for margin to maintain your position and a loss may be sustained well more than a premium received. By selling an option, you accept a legal obligation to purchase or sell the underlying asset if the option is exercised against you, however far the market price has moved away from the exercise price. If you already own the underlying asset which you have contracted to sell (a ‘covered call option’), the risk is reduced. If you do not own the underlying asset (‘uncovered call option’), the potential loss can be unlimited. Only experienced persons should contemplate selling uncovered options, and only after securing full details of the applicable conditions and potential risk exposure.
Private equity Private equity is a form of investment to provide risk capital financing for companies that are either not listed on a stock exchange or wish to delist. Investments are usually made at an early stage in a company’s development when its chances of success are uncertain, and the risks are therefore high. Private equity investments are not usually subject to regulation, in particular with regard to investor protection. Because of this and their lack of transparency, they entail higher risks for investors. This is especially true for private equity vehicles domiciled in countries with comparatively relaxed legislation.
You should realize that private equity investments involve considerable risks and can lead to substantial losses, including total losses. They are also geared to the long term and often have highly limited liquidity.
Hedge funds Hedge funds are usually subject to no or only partial regulation and supervision. Hedge funds are free to choose the asset classes, markets – including high- risk countries – and trading methods they employ. They often have aggressive strategies and work with investment techniques that decouple investment performance from the performance of the underlying markets. Managers of hedge funds often enjoy maximum flexibility in their investment decisions and normally not bound by the rules on liquidity, redemption, avoiding conflicts of interns, fair pricing, disclosure and use of leverage that apply to conventional funds. Investing in hedge funds therefore exposes you to a sufficiently larger amount of risk than investing in conventional instruments.
Commodities: Typical way to invest in commodities is via structured products, commodity funds, commodity futures or OTC swaps and options. With commodity futures, investors may receive physical delivery of the commodity concerned on expiry under certain circumstances. You should sell your commodity futures before the expiry date, if you prefer cash settlement.
The price of commodities is influenced by various factors, including: the relationship between supply and demand; climate and natural disasters; state programs and regulations, national and international events; state intervention, embargoes and tariffs; movements in interest and exchange rates; additional factors arising as the combination of factors mentioned above. You should realize that commodity investments are more volatile than conventional investments, and their returns can often fall suddenly and sharply. The volatility of a commodity’s price also affects the value and hence the price of futures and forwards it underlies. For example, conventional oil futures are normally easy to trade, regardless of their term, but they can become illiquid if market activity is low. This can cause their prices to fluctuate significantly, which is a typical feature of commodities.
If so, indicated in the terms and conditions of any Financial Instruments, the relevant calculation agent may determine that a market disruption event has occurred or exists at a relevant time. Any such determination may delay valuation in respect of the relevant Underlying which may influence the value of the relevant Financial Instruments and/or may delay settlement in respect of such Financial Instruments.
In addition, if so indicated in the terms and conditions of any Financial Instruments, the calculation agent may make adjustments to such terms and conditions to account for relevant adjustments or events in relation to the Underlying including, but not limited to, determining a successor to the relevant Underlying or its issuer or its sponsor, as the case may be. In addition, D24 or the relevant Third Party may terminate or put on hold or extent a holding period of relevant Financial Instruments (including Western) securities follow Ing any such event. In addition, D24 or the relevant Third Party may terminate or put on hold or freeze the chosen Investment strategy and or hold/or sell out period of relevant Financial Instruments (including Western) securities following any such event.